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Comment by grok2 | Hacker News Reader

What does this mean for a lay-person in the so called "emerging and developing economy"? How do they prepare for any fallout?

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The real take here is 'it depends'. The important number is the debt-to-GDP ratio for each country, and which countries we're talking about.

The biggest debt growth has been with China that now has a debt-to-GDP ratio of 255%. Does that number spell doom for China? Not really. It's high, but China can handle it. If it continues to grow in an uncontrolled fashion, it might be a different story.

So in each case, each country is different story, and you have to look at them individually.

The numbers are thrown around with nobody really understanding what they mean. China have a collective debt to GDP ratio of 255%, which means all persons, corporations, local government, and central government have a debt that collectively sum up to 2.5 times the GDP. The Central government itself have debt amounting to 47.6% of GDP.

Meanwhile, US federal government have debt approaching 100% of American GDP, and guess what? Private people and corporations in US hold more debt, I have yet to find a comprehensive collective debt to economy ratio for the US, and I would very much appreciate that number since we can then compare apple to apple.

Also, honorary mention to Japan, whose public government debt exceeded 200% of their economy.

Wikipedia claims close to 300%: https://en.wikipedia.org/wiki/Financial_position_of_the_Unit...

> The financial position of the United States includes assets of at least $269.6 trillion (1576% of GDP) and debts of $145.8 trillion (852% of GDP)

From the first paragraph.

It says 279% in the second paragraph. (And in the third paragraph it says 350%.)

I would beg to differ. China introduced loan securitization back in 2005 - and so there´s a quietly ticking time bomb there, similar to 2008´s US crash, that will eventually go off.

If you expect a wave of debt defaults then that will cause asset price deflation. So accumulate cash now and then use it to buy assets at a discount after the fallout. Of course trying to time the market seldom works for individual investors.

The problem is that most cash money market or savings accounts are only insured to $250K each. If I move money out to them to await my big moment, I have to open several accounts.

Back in 2007 I had funds in NetBank which happened to be the first bank to fail during the crisis. My money was bailed out 100% by the FDIC. But it was a tense time and a lesson I won't ever forget.

Today, banks can fail and the laws have now changed such that savings accounts may be used to "bail in" this time. So beware--cash is not safe, actual hard cash is not safe (can get stolen, safe deposit boxes are not allowed to hold any cash), gold and silver must be in hand, but are not safe for the same reasons as cash. No investments are safe, not even money market funds--those nearly broke the dollar peg in 2009/10.

So what should we do? Bitcoin? Give me a freaking break, lol!

We went to FL in 2009 and I remember vividly how many condos were on sale for unbelievable prices. The thing was, you could not get financing and I had no idea how long any recovery would take if it ever came at all. I expected another leg down, not a recovery. The only reason we had a recovery is because Bush fired up the printing presses and Obama kept them going. Then gas prices went totally insane which is how they bailed out all the banks--on our fucking backs! And NOBODY went to prison! Oh, and the worst part was all the "Peak Oil" propaganda all over the Internet which had to be a psyop because they had to justify the high oil prices which were in no way justifiable at all.

So after long consideration, I think this time we really should just shoot the bastards.

For hyperinflation risks - keep an eye on your countries money supply, specifically the total amount of money held in bank deposits. This shouldn´t be growing at more than 6-7% a year. If it is, owning gold or a stable currency growing less than that(Euro, US dollar) is a good idea.

Try to find out how much loan securitization is going on - this is a financial instrument that lets banks and others trade loans - it is highly destabilising over time, as it increases the ratio of debt to money. It there is a lot of that going on, without a high monetary expansion, try to build up a buffer to take advantage of the forthcoming crash.

Otherwise, just hang on. These are multi-year processes, and usually global financial crashes actually originate in the USA, for systemic reasons, so keep an eye on what´s going on there.

What are the systemic reasons that global crashes start in the US versus other countries?

US is extraordinarily import based while having remote businesses.

That makes it very global impact. Any failure in the USA will be felt by those offshore businesses causing effects on the related economies. Some are more resilient to this than others. It depends on how healthy is the internal manufacturing. E.g. a China crash would also have a similar impact nowadays because the offshore businesses would have problems, but has not happened yet.

What? The poor in developing countries have no cash. They're the ones in debt? They'll find it impossible to borrow any more; impossible to earn enough to survive. They'll go hungry, some will starve and die. Like always?

Isn't there a vast middle-class in these emerging economies...historic financial events might not change things for the very rich and the very poor, but it will definitely change things for those in the middle -- either they become poor or they might be able to either become rich by being prepared and taking advantage of the situation or at the least avoid becoming poorer.

Also I don't think the debt being talked about is the debt of the poor...

No. Most emerging economies have high inequality. Usually there is a small super elite of high net worth, and the majority of other people are poor.

The growth of a large middle class is usually what pushes countries out of this state. A middle classes grow, they demand political power to go with their economic power. This then puts a check on the excesses to either the mega-rich and extreme promises to the poor.

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